Skellerup tips lower annual profit

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Skellerup saw first-half profit fall 17 per cent to $9.5 million after its industrial division weathered the roughest six months of trading in three years.

The rubber goods and industrial equipment maker has also reduced its full-year net profit forecast as a result of the slow start to the year.

It now expects to make a net profit of about $20m, compared to its previous estimate of between $22m and $24m.

First-half sales fell 7.7 per cent to $94m, while earnings before interest and tax slipped 22 per cent to $13.8m.

Chief executive David Mair said its more discretionary industrial division had hit the most difficult trading period since the six months to December 31, 2009.

Sales of industrial vacuum pumps and technical rubber products had fallen, while its roofing and plumbing products business Deks had suffered from economic contractions in Australia, the United States and Europe.

Earnings at its agricultural division were stable, despite drought conditions pushing up the cost of feed and pinching dairy farm expenditure, and a lower payout forecast from Fonterra resulting in subdued spending by dairy farmers in New Zealand.

Skellerup declared an interim dividend of three cents per share. Its shares are valued on the NZX at $1.64, up on $1.43 a year ago but below their peak for the past year of $1.77 in October.

Chairman Sir Selwyn Cushing said the year was shaping up to be a tougher one than the last financial year.

"Our customers have been impacted by unpredictable weather patterns and a slowdown in activity, but as we have seen in the past, orders can quickly turn and we must be ready for this," he said.